Investment climate factors in countries with a fragile political situation (using Afghanistan as an example)

   Aim. The work aimed to classify and analyze the main factors that determine the investment climate of countries with a fragile political situation using Afghanistan as an example, which has been experiencing a long period of political instability and is currently in the process of significant political and economic transformations.

   Objectives. The work seeks to identify the main factors that determine the investment climate in Afghanistan as a state with a fragile political situation; to analyze the identified factors and highlight the most problematic fields; to characterize the areas for improving the investment climate in Afghanistan under political instability.

   Methods. The authors employed a qualitative research method, in particular thematic analysis, to collect and analyze data in order to examine investment opportunities and challenges in Taliban-controlled* Afghanistan.

   Results. A number of conclusions were made regarding the investment climate factors. The policy of the current Afghanistan government regarding foreign direct investment (FDI) is not clearly defined, and legal issues are also not regulated. Despite this, the government aims to develop bilateral relationship in the context of individual investment agreements. Regarding the industrial policy, the Afghanistan government does not impose restrictions on the activities of foreign companies, while the protection of property rights and regulation of intellectual property rights are at a low level, and the level of corruption is high. Afghanistan pays significant attention to stabilizing financial policy and developing state-owned enterprises, but to date this has not yielded significant results. Afghanistan’s socio-demographic policy does not promote labor force development. In all fields, the pressure of sanctions on the country seems to be very significant. In such circumstances, improving the investment climate and attracting FDI will be possible only with the presence of political willpower and a targeted government policy.

   Conclusions. The main opportunities for investing in Afghanistan are determined by interaction with the government of the country and investments in fields critical for the state development. These include infrastructure, the energy sector with the potential of renewable energy sources, mining industry and natural resources, agriculture and food security, education, as well as healthcare and pharmaceuticals industry.

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